Dispute over ‘Masan Marine New City’ … Changwon City “Clear Legal Violations and Unreasonableness in Public Contest Project”

Changwon Special City in Gyeongnam reiterated on the 1st that the illegality and irrationality of the 4th and 5th public offering projects for the Masan Marine New City private complex development implementer have been clearly revealed.

The city audit office pointed out again the violation of laws by the responsible department at the time of the public offering through additional explanatory materials on the same day.

Changwon Special City Hall, Gyeongnam.
Photo by Se-ryeong Lee

"At the time of the public offering project, the responsible department was aware of the costs and duration required due to changes in the development plan and implementation plan through the research service plan for establishing the development direction of Masan Marine New City on February 23, 2019, but arbitrarily changed the public offering area, size, etc., and designed the public offering guidelines according to the development direction vision of Masan Marine New City announced on October 13, 2020," it explained.

"The public offering guidelines state that only those who submitted a letter of intent to participate can apply for the project, and clearly distinguish between project application, project participation, lead consortium, and investors," adding, "Allowing unqualified bidders who did not comply with this to participate in the bidding is unreasonable."

"Even if the city can restrict bidding participation at its discretion, considering the public offering guidelines aimed at preventing indiscriminate participation by insincere businesses and selecting suitable businesses, the judgment on legality and rationality should have been prioritized," it added.

Although the first trial court ruled no charges regarding excessive involvement of public officials during the selection process of the preferred negotiation candidate, the city’s own audit conducted after the first trial verdict confirmed that the public official interfered in a way that compromised the fairness of the public offering evaluation process.

It was also stated that failing to cancel the designation of an unqualified preferred negotiation candidate, extending the deadline for signing the implementation agreement as requested by the private business operator, and including a phrase that the agreement period would be extended until an agreement is reached effectively resulted in an indefinite extension of the agreement period based on a premise of agreement, which is a clear special favor.

Considering the scale and importance of the project amounting to 2.6 trillion won, it was added that the absence of 6 out of 11 external experts from the preferred negotiation candidate selection review committee and the evaluation being conducted by only one public official and one external member in the fields of business plan and operation plan are more irrational than illegal.

Shim Byung-chul, Auditor of Changwon City, Gyeongnam, is announcing the audit results related to Masan Marine New City.
[Photo by Lee Se-ryeong]

Earlier, Changwon City announced the audit results of the Masan Marine New City private complex development implementer public offering project on the 28th of last month, stating, "It was confirmed that the relevant regulations were not properly followed during the public offering process, and legal procedures were not adhered to."

According to the designation of the urban development project area (development plan) and the confirmation of the implementation plan change notice under the Urban Development Act on November 29, 2013, part of the land in the Seohang district of Masan Marine New City was designated as a special planning zone, but through the 4th public offering in 2020 and the 5th in 2021, the location, area, and use of the special planning zone were changed ignoring procedures, it pointed out.

Violations of regulations specified in the 4th and 5th public offering guidelines, such as allowing bids from companies without project application qualifications, failure to report violations of the public offering guidelines, failure to cancel the designation of unqualified preferred negotiation candidates, providing special favors by indefinitely extending negotiation deadlines with the business operator, and excessive involvement of public officials were also pointed out.

The Democratic Party of Korea's Changwon City Council members are condemning the audit results of Changwon City related to Masan Marine New City.
[Photo by Lee Se-ryeong]

In response, the Democratic Party members of the Changwon City Council held a press conference on November 30 and strongly criticized the city’s audit results as a "consumptive audit based on malicious interpretation and forced criticism."

The members stated, "It is a malicious and arbitrary interpretation of laws aimed at tarnishing the previous administration," and claimed, "It is merely a self-destructive commotion showing that Changwon City has no intention of winning the invalidation lawsuit for the non-selection of the preferred negotiation candidate, which is currently in the second trial."

They explained that the development plan and implementation plan change service to supply the special planning zone was conducted in parallel with the 4th and 5th private complex development implementer public offerings, and the service was scheduled to be completed in January 2024.

They rebutted that the clause in the public offering guidelines stating, "If a company that submitted a letter of intent to participate does not submit a project application, participation in bidding for public offering-type projects implemented by the city for the next year may be restricted," is a discretionary clause, and whether to restrict participation is determined at the city’s discretion.

They also added that although the implementation agreement with the preferred negotiation candidate is to be signed within 90 days, it can exceed 90 days if unavoidable due to the project purpose, and that the administrative lawsuit regarding excessive involvement of public officials during the preferred negotiation candidate selection process concluded with no charges.

The members said, "The 4th and 5th public offerings conducted under Mayor Heo Seong-mu’s administration were announced as if they violated laws and gave special favors to specific companies, but all public offering guidelines and announcements were arbitrarily interpreted to distort the facts," and condemned, "Stop the targeted audit for the general election."

The city audit office said, "There may be concerns that announcing audit results while the lawsuit related to the preferred negotiation candidate is ongoing could negatively affect the lawsuit," but added, "Since the project has been stalled for eight years, we thought it was a priority to satisfy citizens’ curiosity, and we judged that clarifying the facts and telling the truth would be advantageous for Changwon, so we decided to announce it."

Audit Officer Shin Byung-chul said, "Internal measures will be taken against those involved who were found to have handled work inappropriately or negligently, and actions will be taken according to relevant regulations for illegal and serious misconduct," adding, "We will require the responsible department to prepare a plan to normalize the public offering project."

He continued, "Whether to request an investigation is under review, and we will consider directness, intent, and gross negligence to ensure that there is no unfairness in the disposition of public officials."

This content was produced with the assistance of AI translation services.